League of Traders Weekly Report (3rd week of September 2023)
The Weekly Report is our summary of key indicators and recent events in the crypto world that professional traders are closely monitoring. This report and other relevant information are first shared via the official League of Traders Telegram channel.
Here are our notes for the third week of September!
- Bitcoin Chart/Ethereum Chart
Bitcoin’s price temporarily dipped last week following the news of FTX’s asset sale, but quickly digested bounced back over to$26500. However, it’s too early to say that we’ve completely broken out of the downtrend that’s been in place since July. A strong break above the long-term moving average (99MA) near $28000 would be considered a bullish sign
Ethereum is up slightly, but the gains are small compared to Bitcoin. It seems to be continuing on its downtrend, as demonstrated by the drop in the taker bid-ask ratio that we mentioned last week. If Bitcoin’s price moves sideways or weakens, Ethereum’s price could fall even more, so be careful.
Bitcoin dominance against MarketCap is closing in on 50%, at 49.96%, up from last week’s 49.48%. We expect Bitcoin dominance to be stronger this week as news of Franklin Templeton’s application for a Bitcoin spot Exchange Traded Fund (ETF) has revitalized hopes for a Bitcoin spot ETF approval.
2. Major Economic Indicators
- US Bond Yields
The US 10-year bond rate rose from 4.298% to 4.347%, which can be interpreted as the market’s reaction to the US producer price index and retail sales data exceeding expectations. The September FOMC meeting is scheduled for this week, so US bond rates are likely to fluctuate depending on the content of the press conference.
- US Dollar Index
The U.S. Dollar Index is on the verge of renewing this year’s consolidation point, rising to 104.929 from 104.729 last week. While there are predictions of a global slowdown due to rising oil prices, the US economy is expected to fare better than other major economies such as China, which has led to a stronger dollar and stronger US bonds. As with US Treasury rates, we expect to see volatility depending on the content of the FOMC press conference scheduled for this week.
- US100 (Nasdaq 100)
The Nasdaq 100 fell to 15200 after a mixed week at 15280. Major semiconductor stocks such as Nvidia and AMD fell on expectations of a slowdown in semiconductor demand due to rising oil prices and economic slowdown concerns. The positive correlation between the Nasdaq 100 and bitcoin has recently increased, and bitcoin’s price is likely to fluctuate with the direction of the tech-heavy Nasdaq 100.
- Gold Futures
The price of gold futures rose to $1929, recovering from last week’s losses. The Nasdaq 100 bounced back from a weak range, and the price of gold futures held up in the face of a stronger dollar, so if prices above $1900 can hold, we could see a convergence and a potential move higher toward a consolidation point.
3. Bitcoin Market Data
- MVRV Z-score
The MVRV Z-score has risen slightly from 0.4 to 0.45. While the current level can be interpreted as an undervaluation zone from a long-term holder’s perspective, it is not out of the question that it could fall to 0, or at least close to it, in the short term. Hasty position increases should be avoided.
- Indicator explanation: The MVRV Z-score is a measure that determines whether Bitcoin’s market cap is overvalued or undervalued by dividing the difference between Bitcoin’s market cap and realized cap by the standard deviation. If the MVRV Z-score is below 0, Bitcoin can be considered to be undervalued. In the overheated market that reached the All-Time High in 2021, scores of 6 or higher were shown.
- aSOPR
The aSOPR has risen above 1 and then dropped back down slightly to stay near 1. In a sideways market, the aSOPR is unlikely to change much. If the average aSOPR rises above 1, we can expect a bull market like the one we saw in March.
*aSOPR is short for Adjusted Spent Outfit Profit Ratio, a value obtained by dividing the price of received bitcoin in the past by the price at the time of transmission. When SOPR is less than 1, it indicates a downtrend, and when it is above 1, it indicates an uptrend. aSOPR is a more accurate value that removes meaningless transactions within the hour for adjustments.
- Open Interest
The exchanges’ combined estimated leverage ratio increased slightly as prices rose, but remained largely unchanged. Because the leverage ratio is not high, it is unlikely to fall or rise due to cascading liquidations.
The exchanges’ combined estimated leverage ratio increased slightly as prices rose, but remained largely unchanged. Because the leverage ratio is not high, it is unlikely to fall or rise due to cascading liquidations.
4. On-chain data
- Exchange inflows and outflows
Exchange Bitcoin holdings are still showing an outflow dominance. Add to that the growing exchange holdings of stablecoins like USDT, and you have a recipe for long-term price appreciation.
- Number of Whale Wallets
The number of 10k+ whale wallets was unchanged last week. The number of 10+ whale wallets continues to remain at the lowest level of the year, making it difficult to expect a short-term boost from whales.
5. Last week’s major news:
- Paypal launches crypto-to-U.S. dollar conversion service
Global payment company PayPal announced in a recent statement that it has launched On and Off Ramps, a service that allows users to convert cryptocurrencies (virtual assets) into dollars. “With the addition of Off Ramps, cryptocurrency wallet users in the U.S. can convert their cryptocurrency to dollars within Paypal and enjoy services like shopping, sending money, transferring money, and more,” PayPal explained.
- Genesis suspends all crypto trading services
Crypto trading firm Genesis, which was hit by the collapse of Three Arrows Capital (3AC) and FTX last year, has suspended all trading operations. A Genesis spokesperson said on Thursday that the company shut down its U.S. office last week and also ceased international spot and derivative trading operations.
- Bitcoin rallies on financial news
After a week that saw bitcoin fluctuate between losses and gains on the back of FTX’s asset sale, the cryptocurrency is recovering, absorbing the bad news quickly. As the market stabilized, news of financial institutions actively entering the cryptocurrency market led to steady gains. Some analysts believe that global asset manager Franklin Templeton, which manages $200 million in funds, has filed for a Bitcoin spot exchange-traded fund (ETF), raising market expectations.
6. Major economic events
- Major economic events last week
This week, the US Federal Reserve will announce its September rate decision. For now, the market is sticking with the September rate hike forecast and waiting for further indicators. While there is a high probability that the September rate will remain unchanged, it is important to note that if the FOMC press conference gives any indication of the direction of the next rate hike in November, the market is likely to be more volatile.
- This week’s major economic events
This week, we have consumer price inflation in the US and interest rate decisions in Europe. We’ll also be interested to see if new jobless claims in the US continue their downward trend, as figures on employment are one of the most important data points for the Fed’s interest rate decisions.
Summary
Positive indicators: Exchange Inflows/Outflows, Bitcoin ETF Applications
Negative indicators: US bond rates, US dollar index
Overall Review: Most of the indicators are neutral and largely unchanged except for the US Treasury yields and the US Dollar Index. Given the upcoming FOMC press conference this week and the current low volatility, we recommend taking a wait-and-see approach and waiting for direction rather than making any hasty position changes.
